The Small Business Monitor Volume 1 - Number 1 - 2003 49 Regulating Entrepreneurial Instincts:Training Practices in Small and Medium Enterprises in South Africa By Dr Philip Hirschsohn Associate Professor, Department of Management University of theWestern Cape 1. Introduction The traditional South African model of capitalism, and the ideology of its entrepreneurs, is founded on Anglo-Saxon ideas of unfettered markets, intense competition between independent firms and weak regulatory institutions, rather than the Rhine model of regulated markets, competition as well as cooperation between firms, and strong institutions (Albert, 1993). In addition, the South African economy was characterised by an alliance between state and capital that promoted a comprehensive system of racial exclusion in order to advance the economic, political and social interests of the white minority. The labour movement has been the major proponent of the introduction of a social market economy based on principles of partnership between the organised interests of the state, labour and capital. In the auto industry the metalworkers' union forced employers to establish an industry education and training board in the early 1990s. This became the model for the statutory establishment of education and training authorities in every sector by the end of the decade. As this legislation gave little consideration to the special needs of SMEs, the author was commissioned to conduct a number of case studies of their approach to training and learning. The paper compares the auto industry model with the preliminary findings of the case studies, in the context of the broader debate about the type of capitalism that is evolving in South Africa. The paper largely follows a chronological path. I begin with a brief historical overview of the role of the labour movement in political liberation and economic policy debates. I then sketch the "model" experience of the auto industry before outlining the policy reform leading to the establishment of sector education and training authorities (SETAs). 2. H istorical Context From the 1970s an independent labour movement emerged as part of a broader anti-Apartheid movement struggling for national liberation. In the 1980s the labour movement grew rapidly under the leadership of the Congress of South African Trade Unions (COSATU), in a symbiotic relationship with other social movements to further the democratic cause. Labour pursued a "radical reform" strategy (Adler and Webster, 1995) which combined negotiation with employers inside formal industrial relations institutions, ad hoc political exchange with the Apartheid state, and collective action on the streets. As the vanguard of the national liberation movement in the late 1980s, COSATU played a critical role in forcing the Nationalist Government to un-ban political organisations in 1990 and helped to usher in the negotiated transition to democracy (Hirschsohn, 1998). While COSATU had relied on shop-floor organisation, militancy and alliances with social movements to exercise power "from the outside" in the 1980s, in the 1990s they sought to establish corporatist policy- making structures to exercise influence "from within the power structure" (Patel, 1993). Labour developed an all- embracing strategy for far-reaching reform of the state, of the workplace, of economic decision-making and of civil society, in order to extend the arena of democratic decision-making and deepen the power of the working class (Von Holdt, 1992). During the struggle for democracy, labour promoted a socialist agenda and envisaged that political transition would lead to major changes to racial capitalism. Union leaders proposed legislative reforms to regulate the exploitative nature of South Africa's racist market economy, and envisaged a social market economy regulated by the major stakeholders – business, organised labour and the state. COSATU's vision was captured in the Reconstruction and Development Programmes (RDP), which emphasises participative, transparent policy-making and the involvement of all organised interests in the development and implementation of labour, economic and development policies. In the first democratic elections (1994) the RDP was the central plank of the election campaign waged by the African National Congress (ANC), with whom COSATU and the South African Communist Party are politically aligned. Although the ANC has replaced the RDP with an all-embracing neo-liberal economic policy framework, COSATU has kept the objectives of RDP high on the political agenda 1 . research